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Agency Problem Types From a Corporate Governance Perspective

Agency Problem Types From a Corporate Governance Perspective

Nazih Khalil El-Jor
Copyright: © 2017 |Pages: 17
ISBN13: 9781522520665|ISBN10: 152252066X|EISBN13: 9781522520672
DOI: 10.4018/978-1-5225-2066-5.ch009
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MLA

El-Jor, Nazih Khalil. "Agency Problem Types From a Corporate Governance Perspective." Entrepreneurship and Business Innovation in the Middle East, edited by Philippe W. Zgheib, IGI Global, 2017, pp. 175-191. https://doi.org/10.4018/978-1-5225-2066-5.ch009

APA

El-Jor, N. K. (2017). Agency Problem Types From a Corporate Governance Perspective. In P. Zgheib (Ed.), Entrepreneurship and Business Innovation in the Middle East (pp. 175-191). IGI Global. https://doi.org/10.4018/978-1-5225-2066-5.ch009

Chicago

El-Jor, Nazih Khalil. "Agency Problem Types From a Corporate Governance Perspective." In Entrepreneurship and Business Innovation in the Middle East, edited by Philippe W. Zgheib, 175-191. Hershey, PA: IGI Global, 2017. https://doi.org/10.4018/978-1-5225-2066-5.ch009

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Abstract

Corporate Governance systems adequately address problems related to accountability and transparency in developed countries. However, in emerging economies these systems are susceptible to exploitation by self-interest-minded individuals entrusted in managing the organization in some cases, by majority shareholders in other cases and at times by third parties from outside the organization. This exploitation falls under the concept of Agency Theory which emerges as a matter of concern that should be dealt with by Corporate Governance systems. Under the Agency Theory, the author classifies the Agency related problems into three types; “Type One”, “Type Two” and “Type Three”. All three types emanate from the separation of ownership and decision making complemented by the natural reality of self-interest requiring thus internal mechanisms of control in order to mitigate the Agency problems along with all Agency related costs. The paper then deals with such mechanisms.

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